Moneylife Foundation held an exclusive, in-depth session which delved into different regulated options for fixed income investments. Avoid unregulated schemes even if they offer lucrative returns. More money has been lost chasing higher yield. What are the warning signs?
Moneylife Foundation hosted its 196th seminar with the event titled “Understanding Fixed Income Securities. High Returns, Safe Capital” conducted by Debashis Basu, editor, Moneylife and Raj Pradhan, columnist at Moneylife, who writes on insurance, taxation and fixed income products. Mr Basu explained the different types of fixed income products available and the returns one can expect. He also explained how much should allocate to different investments of equity and debt based on your age. Post retirement investment options were also discussed.
Mr Pradhan gave insights to the audience on different investment options to benefit from high rates regime. One can choose from fixed-deposits (FD) of banks, corporate bonds/non-convertible debentures, tax-free bonds, fixed maturity plans (FMP) of mutual funds and G-Secs. Reserve Bank of India’s (RBI) Inflation Index Bonds (IIB) may not have fixed returns, but is a new entrant worth considering for retirement savings instead of relying on bank FD. RBI should consider coming up with non-cumulative IIB as it will help senior citizens who rely on steady income from investments. With IIB, you have an option for getting returns beating inflation without any risk of capital. The taxation is still a sore point.
There finally seems to be some respite in the economy with the retail inflation for the month of December 2013, as measured by the consumer price index (CPI), sliding to 9.87% from its previous level of 11.24% in November. With hopes of RBI cutting repo rate possibly after couple of months, there is possibility of bond yields softening. Will you be able to make capital gains with taxable and tax-free bonds purchased today? If so, what are your options for taxable and tax-free bonds in primary and secondary market? How will you evaluate the different debt investment options you have today?
For those in 20% and especially 30% tax bracket, an excellent option is tax-free bonds from government companies. You have an option for long-term investment as the bond terms are 10, 15 and 20 years. It helps with mitigation of reinvestment risks. Getting a near 9% pa tax free returns without reinvestment risk for 20 years from AAA rated government companies should definitely be scooped by savers for their debt instrument portfolio.
FMP has a great tax advantage, but you need to choose carefully. Choose FMPs with high-rated securities investment. Make sure you don’t need the money in the interim. Assume that your investment will be illiquid till the FMP matures. G-secs are rarely explored as an investment option by retail investors, due to numerous reasons. The current scenario of the bond market, however, offers a unique opportunity to savers to add G-secs to their portfolio. The good news is that you have the option to buy G-secs and get it added to your regular demat account, which holds other asset classes like equities/bonds.
Mr Basu explained how over different age groups from 21 to 60 years, one can invest in a mix of equity and fixed income products. Stocks and equity funds over the long run of 5-10 years have more often than not beaten inflation. Other products like scheduled commercial bank FDs and other fixed income products may not deliver high returns but offer safety of capital.
For those who have retired, Mr Basu advised the audience to create a two-part portfolio. One, containing 60% of the total corpus to be invested in fixed income securities such as bank and corporate fixed deposits and bonds to garner safety for the portfolio. And the second, containing 40% of the total corpus should be invested in safe equity mutual funds, which would work towards beating inflation.
For the fixed income part, The different investment options needs to be evaluated for parameters such as safety, ease of investment, returns, liquidity, interest payment options and suitability based on your tax bracket. Each investment option was discussed in detail for its advantages and disadvantages. You can’t get best of everything in one instrument and hence there are good reasons to understand all the options and allocate your money in different options based on your risk appetite.
Injury marks were also found on the body Sunanda Pushkar, who was last night found dead under mysterious circumstances
Doctors, who conducted an autopsy on the body of Sunanda Pushkar at AIIMS, on Saturday said it was a case of 'sudden, unnatural death'. They however, ruled out poisoning even as police investigated various angles into the death of Union Minister Shashi Tharoor’s wife.
Injury marks were also found on the body of 52-year-old Pushkar, who was last night found dead under mysterious circumstances in the luxury Leela Palace hotel in South Delhi.
The head of the three-member panel of doctors that conducted the autopsy on Pushkar, said, “We have conducted the post-mortem examination... It is a case of sudden, unnatural death” but ruled out poisoning.
However, he said the team has preserved certain “biological samples for toxicological analysis as well as visco-pathological examination.”
“We have completed the whole procedure. Samples for toxicological analysis means ruling out any poison. Some pathology of the heart has been preserved by us,” he said.
Pushkar was found dead in her suite at the hotel and the body was shifted to AIIMS at around 3:30am for post-mortem.
The police is also expected to record the statement of Tharoor, who was admitted to AIIMS following complaints of chest pain and was discharged later.
Pushkar and Tharoor were at the centre of a raging controversy when reports emerged that she was upset over reported text and tweet messages between her husband and Mehr Tarar, a Pakistani journalist.
Gupta, who is Head of the Forensic Sciences Department at AIIMS, said the autopsy report would focus on investigating from a medical angle the sudden unnatural death.
He said the final autopsy report will be prepared within the next couple of days after receiving reports of toxicological analysis and visco-pathological examination.
“After receiving all these reports in the next couple of days, we will finalise the post-mortem report and we will give our opinion in the case,” he said.
When asked about the injuries on the body, he refused to give details saying as police was working on the case, certain issues cannot be revealed.
“There were certain injuries on the body. I cannot reveal the details of the injury. Basically in medico-legal cases, the number of injuries does not matter. Whether these injuries were related to fatality or not matters,” he said.
Asked whether the injury caused death, he refused to give a direct answer.
Pushkar and Tharoor had checked into the hotel on Thursday as their home was being painted.
A joint statement from the couple on Thursday said they were “happily married” but distressed by “some unauthorised tweets”.
Pushkar had accused Tarar of “stalking” her husband and trying to “break” her marriage when she was away for medical treatment.
She had told a couple of newspapers that she was considering divorce from Tharoor in the wake of the alleged extra-marital affair.
The Pakistani journalist rubbished the charges of having any relationship with Tharoor.
Infotech Enterprises reported a net profit of Rs69.39 crore in December quarter on strong global revenues out of which 57% of its revenues came from the US
Infotech Enterprises, an information technology (IT) solutions company, recorded growth of 12% in its third quarter net profit at Rs69.39 crore compared with Rs61.82 crore in same a period year ago.
Durin the quarter to end-December, Infotech Enterprises total revenues stood at Rs578.33 crore, up 22%, from Rs475.10 crore a year ago period. Roughly 57% of the revenues contribution came from the US, 29% from Europe and 14% from Asia-Pacific region. The company earned 51% revenues from overseas and hence was benefited by the depreciating Indian rupee.
Segment-wise, Infotech Enterprises’ maximum revenues in the December quarter came from its core business of delivering engineering solutions which makes up 63% of its revenue, while 36% comes from its utilities, telecom and data transformation, analytics business units.
“After four quarters of flat business, we saw significant growth in our business for this quarter. All the four business units grew, three of which recorded the highest ever quarterly revenue. Our margins were flat owing to significant investments that we are making in future sustainability and growth of business, which includes both additional manpower and one time initiatives. We are seeing increasing traction and spend from our customers across the world,” said by BVR Mohan Reddy, chairman and managing director of Infotech Enterprises.
The company won key deals and acquired 11 new customers during December quarter.
Infotech Enterprises closed Friday 0.85% down at Rs343.90 on BSE. While, the benchmark Sensex ended the week 201 points down at 21,063.